Retail inflation eases to five-month low in March

India’s retail inflation eased to a five-month low in March, but remained above the Reserve Bank of India’s medium-term target, supporting views that monetary policy is likely to remain unchanged at the next review in early June.

The RBI, which has kept rates steady since a cut of 25 basis points in August, is widely expected to maintain rates at their current level in the next review due on June 6.

Last week, central bank lowered its April-September retail inflation projection to 4.7 percent to 5.1 percent, from a previous range of 5.1 percent to 5.6 percent released in February.

India’s consumer price index rose 4.28 percent in March from a year earlier, data released by the Ministry of Statistics showed on Thursday.

Analysts polled by Reuters had predicted March’s consumer inflation rate would ease to 4.20 percent from 4.44 percent in February. Forecasts ranged from 3.90 percent to 5.10 percent.

Most of the analysts expect the monetary policy committee will hold rates for at least a few months.

“We expect that the committee will hold rates in the coming months in order to completely assess the macro conditions before going in for a rate hike toward the end of the year,” said Anis Chakravarty, a lead economist and partner at Deloitte India.

The retail inflation rate has been moderating since it hit a 17-month high of 5.2 percent in December.

It had crossed the 12-percent mark in 2013, but has remained under control since, thanks to lower crude oil prices, tighter monetary policy and fiscal measures.

RBI Governor Urjit Patel said last week there were still uncertainties, such as a proposed hike in the minimum purchase prices of foodgrains, fiscal slippage worries and volatility in global crude prices.

Consumer food prices rose 2.81 percent in March, compared with 3.26 percent in February, as prices of pulses fell more than 13.4 percent from a year earlier.

Rising global crude oil prices and domestic health cost prices are contributing to India’s inflation while prices of services, such as internet data prices, have fallen.

Prime Minister Narendra Modi, who has ended subsidies on petrol and diesel, had raised fuel taxes to raise about 2 trillion rupees ($ 30.59 billion) in extra revenue in 2015/16.

Fuel and light inflation stood at 5.73 percent, compared with 6.80 percent in February, while housing inflation stood at 8.31 percent, from 8.28 percent the previous month.

Core inflation, excluding food and energy, was estimated at 5.1 percent to 5.3 percent in March.

Separately, India’s annual industrial output grew 7.1 percent in February, data released on Thursday showed, in line with 7.0 percent forecast in a Reuters poll.